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What new pension scheme trustees need to know

You have up to six months to gain the relevant trustee knowledge and understanding you need to carry out your role and fulfil your duties. However, you need to be equipped to be able to make any decisions that may arise in the meantime.

To do this effectively, you must be familiar with the scheme’s documentation. You must also declare any conflicts of interest.

Our guide for new trustees helps you get to grips with your new obligations as a trustee. It also provides more information about the trustee board and what to expect at your first trustee board meeting.

Trustee knowledge and understanding

The obligations of trustees include:

  • ensuring that a statement of investment principles is prepared and maintained for the scheme
  • having relevant knowledge and understanding

Relevant knowledge and understanding means trustees must have a working knowledge of:

  • the trust deed and rules of the scheme
  • any statement of investment principles
  • the statement of funding principles (defined benefit schemes only)

Trustees must also have knowledge and understanding of:

  • law relating to pensions and trusts
  • principles relating to the funding of occupational pension schemes
  • investment of the assets of those schemes

Training is an important feature of a well-run scheme. Trustee training should be planned and managed by doing a 'training needs' analysis (or training plan) and keeping a log of all training undertaken.

Trustee toolkit online learning

To help you get the knowledge and understanding you need we provide a free online learning programme that you should complete, unless you arrange the equivalent learning. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit

Scheme documents

You should have access to the following:

  • trust deed and rules
  • minutes of meetings
  • any scheme booklet
  • the annual report and accounts
  • any other relevant scheme documents, like the business plan

If you’re a corporate trustee, you need to know the principal contents of your memoranda and articles of understanding. These should reflect the trust deed and rules of the scheme.

Trustee toolkit online learning

The module 'Introducing pension schemes' includes a tutorial related to important scheme documents. You can also download a guide explaining the most common documents from this module. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit

Statement of investment principles

The statement of investment principles (SIP) must include your policy on:

  • choosing investments
  • the kinds of investments to be held, and the balance between different kinds of investment
  • risk, including how risk is to be measured and managed
  • the expected return on investments
  • cashing in investments
  • the extent, if at all, you take account of social, environmental or ethical considerations when taking investment decisions
  • using the rights (including voting rights) attached to investments if you have them

Trustee toolkit online learning

The module 'An introduction to investment' covers investment in a pension scheme including setting an investment strategy, the statement of investment principles, types of asset and risk and reward. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit

Statement of funding principles

As a trustee of a defined benefit scheme, you are responsible for the statement of funding principles.

The scheme funding provisions require you to:

  • prepare a statement of funding principles within 15 months of the effective date of the scheme’s first valuation (the effective date is the date used for calculating the assets and liabilities of the scheme)
  • review the statement of funding principles from time to time and, if necessary, revise it (within 15 months after the effective date of each actuarial valuation)
  • obtain regular actuarial valuations (at least once every three years) and reports (at least once a year)
  • put in place a recovery plan addressing any funding shortfall (within 15 months after the effective date of an actuarial valuation)
  • keep scheme members informed about their scheme's funding position by issuing regular summary funding statements

Trustee toolkit online learning

The module 'DB recovery plans, contributions and funding principles' provides some further information on statements of funding principles. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit

Go to the funding section for guidance on how to ensure your scheme is well funded.

Conflicts of interest

Conflicts of interest can crop up from time to time, and as long as they are dealt with properly, there is often no reason to stop being a trustee. You must declare actual and potential conflicts of interest involving you, and persons connected to you (eg your spouse, or a company of which you are a director). You must make sure the other trustees know and take sensible steps to manage or remove the conflict. 

There are different conflicts of interest depending on whether you’re running a defined benefit or defined contribution scheme.

Trustee toolkit online learning

The tutorial 'Conflicts of interest' in the module 'The trustee’s role' will tell you how important it is to be aware of any conflicts of interest, and how to resolve these conflicts. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit

Go to conflicts of interest in your DB scheme or conflicts of interest in your DC scheme for guidance on the key principles for addressing conflicts of interest.

Trustee protection

It's important to know what protection you have as a trustee against liability for claims about your actions as a trustee. Check your trust document or speak to your fellow trustees to find out.

Look out for:

  • indemnity clauses
  • exoneration clauses
  • exemption clauses
  • references to insurance policies

These are not included in all trust deed and rules. Remember you're only protected by these clauses or policies if you've acted honestly and within the terms of the protection. And you continue to be responsible for all your decisions even after you’ve stopped being a trustee.

Trustee toolkit online learning

The tutorial 'Trustee liabilities and protection' in the module 'The trustee’s role' will tell you more about the different protections that may be available to you. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit